Overview

"Distribution Codes" are an optional feature in the General Ledger application that provides for automatic monthly distributions from one account to another. Journal entries are created, which debit and credit the balance of an account, based on pre-determined percentages.

Setup

"Distribution Codes" are initially set up under 'General Ledger' - 'File Maintenance' - 'Distribution Codes'. The codes are then added to the "Distribution Code" field in the 'Chart of Account' file.

It is desired to distribute the costs of the Laundry Department, so that the expenses are shared between: Rooms (60%), Health Club (30%), and Other Revenue (10%).

Step 1: Set up a Distribution Code as follows:

Code: 10 Description: Laundry Allocations

 

Seq Account Description Percentage

10 11111-11 Rooms 60.00%

20 12344-22 Health Club 30.00%

30 12343-99 Other Revenue 10.00%

40 12233-31 Laundry -100.00%

 

NOTE: A positive percentage is a debit; a negative percentage is a credit. The total amount of the distributions must equal zero.

Step 2: Add this "Distribution Code" to the "Laundry Account".

In 'General Ledger', 'File Maintenance' and 'Chart of Accounts', insert "10" in the field - 'Distribution Code' for the account 12233-31 (Laundry).

Usage

On a monthly basis, journals are created through the 'Create Allocations' task in the 'Monthly Processing' menu. Running this task generates an un-posted batch of journal entries that can be edited or posted unedited.

Notes

Each "from" account number needs its own "Distribution Code". For example, if the Laundry Department consists of three accounts, each distributed 60%, 30% and 10% (as above), three codes would need to be set up, each reflecting the 100% (credit) to the "from" account.

Summary

"Distribution Codes" create automatic journal entries based on a percentage of an account's balance. This can save entry time and reduce user error for any accounts whose balance is partially or completely allocated to other accounts.